The legal gymnastics and thorny history of Maryland’s correctional health care provider

Earlier this month, a prisoner at medium-security state-run facility on the Eastern Shore filed a pro se lawsuit against YesCare, the private company responsible for providing medical care in state prisons and Baltimore jails.

On a piece of yellow legal paper, and despite only having a seventh-grade education, Calvin C. Murray scrawled out in painful detail how he had suffered a mild stroke at Eastern Correctional Institution due to a heart rhythm disorder, one that left him partially paralyzed for six days, according to his lawsuit. YesCare’s response, Murray asserted, was to give him 600 milligrams Ibuprofen.

“I’ve been under so much stress wondering if I am going to have a heart attack or stroke and [it] has made my PTSD worse,” Murray wrote in his complaint. “Basic medical care has been violated. I believe [it] is malpractice putting profits over patients.”

Murray’s lawsuit is one of more than a half-dozen that have been filed by Maryland prisoners in federal court against the company this year alone, according to court records. Among the other complaints: a prisoner not receiving medication for his seizure disorder, another with an untreated lipoma, and a prisoner who suffered from a condition called deep vein thrombosis but was not given treatment.

The medical malpractice lawsuits routinely lobbed at the company are an all-too-common occurrence, according to a new report by The Private Equity Stakeholder Project released Tuesday on the private-equity-backed YesCare that details its controversial legal maneuvers and its history of performing poorly in its many contracts with jails and prisons across the country.

In the decade leading up to late 2021, YesCare, which has been owned by private equity firms for more than 16 years, had faced more than 1,000 lawsuits alleging substandard medical care, according to the report.

Dozens of those lawsuits were still proceeding through state and federal courts before the company behind YesCare, formerly known as Corizon Health, filed for what is referred to as a “Texas two-step” bankruptcy in February 2023, splintering into two different entities, the report detailed.

That restructuring allowed the new company, YesCare, to “evade legal liabilities” that burdened the former company, which is now known as Tehum Care Services, the report said. And legal experts have observed that such bankruptcies can suspend lawsuits, giving companies like YesCare more leverage in settlement talks, according to the report.

The report on the private-equity-influenced landscape concluded that Corizon, YesCare, fellow correctional health care giant Wellpath, “and any other healthcare providers seeking profits from prisons and jails should be held accountable if they are found liable for harms created by poor services.”

“This same principle applies to any other company that exists: one must not be allowed to harm others and then evade responsibility through legal maneuvers,” the report said. “Otherwise, more bad actors — including other private equity firms — may be drawn to do the same, exploiting patients and families for short-term gain.”

Maryland hired what was then known as Corizon Health as its medical provider for prisons and Baltimore jails in 2018 to a five-year, $680 million contract that is set to expire at the end of the year. The state corrections department declined to comment on the private equity report. YesCare could not immediately be reached for comment.

Michael Fenne, who authored the report on private equity’s influence on YesCare, told The Baltimore Banner he wasn’t sure why Maryland would stop doing business with Corizon Health at one point, only to contract with them again about five years later, in 2018, but that it could have been because there are “so few options between prison health care providers.”

“They may have a bad experience with one and just have to go through another one that has a checkered history,” Fenne said.

A private equity gold rush

YesCare’s history stretches back four decades, and its parent company’s dealings with the private equity industry date back to 2007, according to the report.

The firm Beecken Petty O’Keefe & Company owned Corizon Health from 2007 to 2011, the report said, and one partner in the firm predicted up to $500 million worth of contracts to be put out to bid in 2009, during the height of the Great Recession.

“We think the idea of outsourcing this type of service will be an attractive option as states try to cut budgets,” Corizon’s chief executive said in February of 2009, according to the report.

That landscape set the stage for correctional health care companies to obtain big contracts, the report said. In turn, private equity firms rolled the companies up into larger ones in order to secure a better market share, Fenne said.

“Then, if they [the health care providers] don’t meet the standards in those contracts, there’s nowhere else for states and counties to go,” he said.

Fenne said the private equity firms were likely drawn by the short-term profits of the contracts, which would generate tens of millions of dollars in revenue. Meanwhile, the companies were minimizing costs, leading to poor health outcomes, but it is up to prisoners to file lawsuits, often pro se, in order to hold them accountable, Fenne added.

“It’s hard to get a case through the court system,” he said.

Between Corizon Health and YesCare, the related entities have changed hands between four different private equity firms since 2017, when Beecken Petty O’Keefe & Company sold Corizon Health to BlueMountain Capital Management, the report said. In June 2020, an investment firm focused on acquiring struggling companies, Flacks Group, acquired Corizon from BlueMountain, the report added.

Then, as of this summer, the private equity firm Perigrove began listing YesCare as one of its portfolio companies, and a Perigrove executive has been on YesCare’s executive board since December 2021, the report said.

Two-step bankruptcy as an ‘inevitable conclusion’

Fenne’s report lays out in detail the “series of steps” that Corizon Health’s owners began in May 2022 to convert the company into a Texas corporation, bolster it with mergers of affiliated companies, then split it into two entities.

Those moves, the report explains, set the company up to perform a Texas two-step bankruptcy, a routine that has come under scrutiny from U.S. Sens. Dick Durbin and Elizabeth Warren.

Under the model, the two companies that emerge from the restructuring have very different outlooks: One is saddled with much of the former company’s liabilities, and little cash to cover them, while the other is bolstered by the contracts and service agreements that made the former company money, according to the report.

Just before declaring bankruptcy in February, Corizon Health rebranded to Tehum Care Services. The company’s bankruptcy filing estimates liabilities between $10 million and $50 million, “at least 10 times more than the bank-account cash left to Corizon in the divisional merger,” according to the report, which estimated that four companies before Corizon had used the Texas divisional merger law to split prior to a bankruptcy that absorbs liabilities.

Fenne said that the fate of YesCare’s maneuvers has yet to be decided by the bankruptcy court, but if the company’s plan is approved, it would limit its liability significantly.

The approval of the deal “could be a model for other companies; it kind of locks in and gives a final conclusion to this whole two-step saga,” Fenne said. That, he added, would be disastrous for prison health care, as other companies would likely follow suit.

“If you’re running a company with the intention of bankrupting it later and then going through this two-step maneuver, then you have no immediate incentive to care for your prisoners,” Fenne said. “It really comes down to that profit motive.”

Daniel Hatcher, a University of Baltimore Law School professor and author of “Injustice Inc.”, said he has a litany of concerns around the direction correctional health care is heading in Maryland. But chief among them, he said, is how the state government agencies have facilitated its devolution.

“They’re the ones deciding to enter these contracts and they’re the ones in charge of oversight,” Hatcher said.

While private companies are motivated by profits, the state, whether through its correction department or the attorney general’s office, is supposed to maximize the public interest, Hatcher added.

Hatcher pointed to the recent moves by the attorney general’s office to contract out with private attorneys in its defense of a health care lawsuit brought against Baltimore jails and its refusal to explain its decision. He emphasized the absurdity of the attorney general’s office telling the independent medical monitor he could no longer communicate directly with YesCare clinicians.

State government agencies, Hatcher said, “are increasingly running like the companies they’re doing business with.”

This story may be updated.

bconarck@thebaltimorebanner.com

Ben Conarck

benjamin.conarck@thebaltimorebanner.com

Ben Conarck is a criminal justice reporter for The Baltimore Banner. Previously, he covered healthcare and investigations for the Miami Herald and criminal justice for the Florida Times-Union.

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